Can Mobile Money Transform a Country?

Two years after the earthquake, Haiti is rebuilding not just brick by brick, but click by click.

A message confirms the deposit of a new customer who is signing up for Digicel’s Tcho Tcho mobile banking on March 3, 2011, in Port-au-Prince, Haiti. Photo Credit: Kendra Helmer/USAID

The earthquake left behind a government in rubble, an economy in shambles, and a people living in makeshift camps, coping with enormous loss. Against this backdrop, the possibility of progress lives not just in the resilient spirit of the Haitian people, but also in the simple power of their mobile phones.

In June 2010, USAID and the Bill & Melinda Gates Foundation launched the Haiti Mobile Money Initiative (HMMI)(PDF, 163KB). This program leveraged the private sector and the ubiquity of mobile phones to bring financial services to Haitians, 90 percent of whom didn’t have access to a bank account before the earthquake destroyed nearly one-third of the country’s bank branches, ATMs, and money transfer stations. Put simply, mobile money gives Haitians access to banking without building a single bank.

It worked. In January 2011, one year after the earthquake, HMMI awarded Digicel and its partner bank, Scotiabank, a “First to Market” Award of $2.5 million for “Tcho Tcho Mobile.” Five months ago, HMMI awarded mobile operator Voila and their bank partner, Unibank, $1.5 million for “T-Cash.” While verification is still underway, data reported by the industry indicate that there are nearly 800,000 registered users. Moreover, there are over 800 agent locations now available to serve clients. In a country where there are fewer than two bank branches per 100,000 people, this represents a near doubling of accessible financial services.

These numbers are significant, but what do they mean for the people of Haiti? Why should we care about the growth of mobile money in Haiti and the rest of the developing world?

First, mobile money accelerates access to financial services for the 1.8 billion people with access to a phone but not a bank. It allows people to safely store and send money to friends and family in need. Today, 15 million Kenyans, or 70 percent of the country’s adult population, use Safaricom’s mMoney product, M-PESA to manage their money. Five years ago, only six million Kenyans had access to basic financial services. This is a vast improvement when the alternative is sticking money in a mudjar or under a mattress. Payments also become the rails upon which other financial services—savings, remittances, credit, and insurance—can ride. It allows the poor to reclaim a sense of stability and security in a world often characterized by uncertainty and vulnerability.

A customer (left) signs up for mobile banking at a supermarket on March 3, 2011, in Port-au-Prince, Haiti. Photo Credit: Kendra Helmer/USAID

Second, it also serves as the lynchpin in government efforts to improve transparency, mitigate corruption, and enable responsive government. Take Afghanistan as an example. When the Afghan government started paying government employees and police officers through mobile phones, the employees thought they had received a nearly 30 percent raise. Instead, they were paid what they were supposed to be paid for the first time but without middlemen taking a percentage as it passed through their hands. These payments can also be quickly disbursed and tracked, which engenders accountability and responsiveness across government.

Third, mobile money helps unlock the private sector to create sustainable fee-for-service models. In Kenya, 700 innovative businesses exist because they integrated with M-PESA to lower transaction costs enough to profitably extend critical services to people in remote areas. In agriculture, UAP Insurance and the Syngenta Foundation partnered to offer farmers index-based insurance using M-PESA to collect small premiums and issue payouts. In health, Changamka Microhealth Ltd. is using M-PESA’s bill pay function to help expectant mothers save for maternity health care. In water, Grundfos LIFELINK levered M-PESA to create a fee-for-service model whereby rural communities access safe water and pay for it using M-PESA.

It is no doubt going to take time and effort for Haiti to follow in Kenya’s footsteps. And it is certainly true that mobile money cannot transform a country by itself. We still need the bricks. We still need the human ingenuity and resilient spirit evident all across Haiti. But two years after the earthquake, we’re making real progress, click by click.